Bitcoin's Profitable Supply Drops to 55%, Analyst Flags Short-Term Bearish Signal

The recent sharp sell-off in the cryptocurrency market has pushed a significant portion of Bitcoin holders underwater, at least on paper. Darkfost, an analyst at on-chain data platform CryptoQuant, shared noteworthy data on Bitcoin's supply in profit. According to analysis posted by Darkfost on X, Bitcoin has shed roughly 12.5% of its value over the past week.

Following the decline, only 55% of the circulating Bitcoin supply is currently in profit. The analyst noted that this level is historically low and carries meaningful implications for market sentiment.

The supply-in-profit indicator measures the share of Bitcoin in circulation currently held above its cost basis relative to the spot price. A falling ratio means more investors are sitting on positions that have not exceeded their entry price, suggesting that market pressure is mounting.

Darkfost pointed out that in past bear markets, the indicator has slipped below the 50% threshold. The analyst recalled that it dropped to 53% in February of this year and noted that if the current pace of decline continues, the 50% mark could be tested again.

According to Darkfost, this setup can be read as a short-term bearish signal for Bitcoin, since a shrinking pool of profitable holders tends to coincide with weakening market confidence.

Long-term investors, however, may see the same data through a different lens. Historical patterns suggest that periods of low profitable-supply ratios have often marked attractive entry points, the analyst noted, adding that moments of elevated market fear have historically preceded significant accumulation cycles. In other words, the same chart that looks scary today often looks like a discount a few years later.

This is not investment advice.